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Experts told why the first cryptocurrency can cost $18 thousand or $ 100 thousand and whether the current rate of $ 55 thousand is fair
“There are no objective parameters for evaluating Bitcoin”
Financial analyst of the crypto exchange Currency.com Mikhail Karkhalev
To assess the value of a company’s shares, investors use financial statements, market share, technologies, patents, manufactured products, company investments, and so on. In short, they study a lot of important information that will tell you whether the company is worth its money or not. This is the so-called value investments – the search for undervalued companies.
When an investor comes to the conclusion that a company is worth less than it should, he buys it, and vice versa, if the company is overvalued, he does not buy or sell it. With bitcoin, this approach will not work, because it cannot even be attributed as accurately as possible to any asset class. It is just a digital property that does not participate in economic activity: as a business/product/service, as a raw material, as a currency.
Bitcoin, being a property, allows its owners to preserve the value of the capital invested in it, as well as to multiply it. For example, works of art, precious stones, collections of something have a similar function. Such things can cost as much as you want and there are no objective parameters for their evaluation. As a rule, they simply go under the hammer of the auction, and their value is determined by the principle of “who will offer more”.
Based on the second point, we can only confirm a certain theory that bitcoin is a cool speculative tool or asset that allows you to earn both on the difference in its value and with the help of long—term ownership. Trading speculative instruments is also, in a sense, an auction. If there is a demand for bitcoin, its price rises. If there is no demand or its supply prevails in the market, the price falls.
Since the exchange price is a balance of supply and demand, it turns out that the value of bitcoin today is also in equilibrium, that is, it costs exactly as much as it should cost. This will not work with oil prices, since the cost of raw materials is extremely dependent on the level of production, the economic and political situation in the world, and so on. That is, no exchange-traded asset in the world has a price that is based solely on the balance of market supply and demand.
And finally, the situation in the global economy and the development of technology. This point slightly contradicts the previous one, but the point here is not that the economy is bad, so bitcoin is growing as a protective asset, like gold, for example, but that bitcoin has been growing at an incredible pace for more than 10 years, because something is conceptually wrong in the global economy. People are not satisfied with the banking system, are not satisfied with class inequality, are not satisfied with total control over money, assets, expenses and income, are not satisfied with the printing press, the actions of politicians. The development of technology and the desire to become more independent prompted people to create and support bitcoin. That is why it is growing in price, because in a sense, it is trusted more than the traditional economy.
It turns out that at the moment, no matter how you look at it, bitcoin costs exactly as much as it should cost. If today its price is $55 thousand, it is fair. Taking into account all the possible factors listed above, if tomorrow it falls to $20 thousand or grows to $100 thousand, then something has changed and now its value is fair at the current level. In short, there are no objective factors that would allow a fair assessment of BTC, like oil, gold, euro or dollar, Apple shares or “MAGNET”, except for the current balance of supply and demand.
“The price of Bitcoin is the result of trust”
EXMO Crypto Exchange Development Director Maria Stankevich
In my opinion, the objective price of bitcoin, as well as other currencies (not only crypto) is always the result of trust. There are no differences from classical finance here, since the euro or dollar exchange rate is also the result of trust, the result of the intersection of supply and demand curves.
Trust, as in the traditional financial market, is backed by infrastructure (the dollar is backed by the banking structure, economy, GDP, and so on). Similarly, cryptocurrencies are backed up by financial institutions, exchangers, exchanges, and a huge mining infrastructure. Accordingly, in different periods of time, the objective price of the asset will be different. I think that now the price of $ 55 thousand fully reflects the current state of affairs in the market.
“The cost of bitcoin mining is $15-18 thousand.”
ENCRY Foundation Co-founder Roman Nekrasov
The objective price of bitcoin is determined by market mechanisms based on the supply/demand ratio. For how much the owner of bitcoin is willing to sell, and the seller agrees to buy bitcoin. Naturally, the owner wants to sell more expensive, and the seller wants to buy cheaper, but somewhere in the middle their interests will meet — this is the market price of bitcoin.
Here the question arises: what if buyers want to buy bitcoins for $ 100? Everything is simple here. The owner of bitcoin will not sell bitcoins for $ 100 if the purchase of this coin cost him 500 times more. Even if it is a miner and he has mined bitcoins on his own equipment as a reward for computing work on the network, he will not sell bitcoins so cheaply, because he has operating expenses — the cost of mining equipment, electricity bills, maintenance, air conditioning systems, rental of premises, salaries to employees and so on. And all this against the background of a high hashrate, even taking into account the fact that it has not yet fully recovered from the summer fall. In total, we see that the cost of mining one bitcoin is now at least $ 15-$ 18 thousand. Why would a miner sell mined bitcoins in the negative?
I like bitcoin because it is absolutely a market tool. It cannot be underestimated or overestimated. Bitcoin costs exactly as much as it costs. Its current market price fully reflects the value it carries in the eyes of market participants.
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